If you want to attract new deposits, you need to know that every serious investor wants to see two things: excellent past performance and steady, consistent live trading results. If your past performance is good, you can get the investors. Many traders seeking for directly high deposit investors. But it is not realistic.
Generally, Forex trading attracts a traders and investors with lower levels of capital due to the large leverage offered, paired with the low minimum deposit that most brokers offer. Because of this, when traders finally reach the consistently profitable milestone, most Forex traders look to take on additional capital so they are able to make a living from their craft.
So the best way to get investors for Forex trading is either through finding private investors personally, or using prop firm funding to scale your capital fast. Private investors could work out better in the long term but finding proper firm funding is much easier and faster. In this article, Let’s see how to get investors for Forex trading.
Steps to Getting Investors for Forex Trading
There are two most common ways of attaining capital, let’s have a loon on it….
PAMM Accounts & Track Records
Until more recently, the most common way to get investors for Forex trading was to go and find private yourself. This would usually be either through friends, family, acquaintances or even through investing and trading forums.
This method can be really successful for finding investors. But these days it is definitely the longest winded and requires the most work from you. Once you have a track record to produce with in-depth statistics of your trading performance. You will then usually setup a PAMM account with a regulated Forex broker.
Typically, the investors will then deposit with your chosen broker. After they have conducted due diligence on the broker in question. Then you will be able to manage their funds here without actually getting a license to trade other people funds.
In return for managing the investors funds, you will either be paid a quarterly management fee or receive a percentage of the profits obtained from your trading efforts. However, there are few issues with looking to get capital in this way.
Simply this is same as your hedge fund, you no need to think about payments, taxes, money collecting, technology and communication. PAMM account will do everything for you, and you can get over one million potential investors worldwide.
The next opportunity is to find a platform where investors are looking for traders to manage their funds. High level investors with a lot of capital will not really even look at you. Unless you have years of track records and incredible trading results. At the same time low level investors don’t have the capital or realistic expectations of trading to make your arrangement worthwhile.
Prop Firm Capital
Prop firms bridge the gap between retail traders and institutional levels of investment. It was relatively difficult to get funded and it will take years of consistency to get noticed. If you are unfamiliar with how these companies work, instead of having a track record to prove you can trad. They make you take challenge or test to prove your skills. These usually last 30-60 days and during the process. You must adhere to set trading rules regarding drawdown, profit, daily loss and maximum loss.
If you hit the target and stay within the rules, you will receive funding and get a profit share up to 80% on the capital. There are numerous prop firms and each firm has different trading requirements and funding options, depending on your preferences and style of trading.
Prop firms are by far the most popular way of scaling a trading account. And have completely replaced the idea of finding investors. The security and ease of working with a firm outweighs the potential upside of having a few private investors these days.
Pros of Having Investors
It goes without that you are able to potentially make a lot more money with a large trading account. larger trading capital also opens up more doors for new investors and new projects. You are not really thoughts of as a professional trader. If you only have a few hundred dollars in your account, so finding the first few investors is definitely hard.
However, once you start meeting investors, have connections and prove yourself in the industry. Capital will typically flow in your direction and the potential to scale up to new levels will be there.
Cons of Having Investors
Psychological aspect and the additional stress are the first issue with having investors for your Forex trading. Simply think that, when you first took on someone else’s capital, the stress was really getting to me. You should get the exact same returns on a large account as a small account, using strict risk management.
Next potential issue with having investors is the fact you may now have targets to hit. And rules surrounding drawdown, holding trades over news and weekends. Which you didn’t have when you were only responsible for your own trading.
If you found private investors, the terms of your agreement will be subjected to whatever you decide before beginning trading with them.
The Bottom Line
In summary, if you are a profitable Forex trading looking to take on investors capital. The best and fastest way to do this is by using prop firms. With prop firms you can have access to vastly more capital. Eve with no long record or having to deal with multiple different investors demands.
Trading rules are all laid from the start and you can receive funding from 0 to 60 days. Depending on which of the best prop firms you are trading with. As a final word I will tell you about another opportunity. You can get private corporations and prop companies.
If you contact them, they will ask you to keep a very low drawdown that is less than 5% and follow the rules. In this case, you will get several times more money but and great responsibility as well.
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